Problem 15-9A On January 1, 2017, Lock Corporation issued S2·360,000 face value,
ID: 2586512 • Letter: P
Question
Problem 15-9A On January 1, 2017, Lock Corporation issued S2·360,000 face value, 7%, 10-year bonds at $2,201,642. This price resulted in an effective-interest rate of 8% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January1 Prepare the journal entry to record the issuance of the bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date January 1, Account Titles and Explanation Debit 2017 Prepare an amortization table through December 31, 2019 (three interest periods) for this bond issue. (Round answers to O decimal places, e.g. 15,25o.) LOCK CORPORATION Bond Discount Amortization Interest Payments Bond rtized Carrying Annual Interest Periods Interest to Interest Expense Discount Unamortized Be Paid to Be Recorded Amortization biscout Value Issue date 2 Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2017. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Dec. 31, 2017 Prepare the journal entry to record the payment of interest on January 1, 2018. (Round answers to O decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and ExplanationExplanation / Answer
Date Account titles and Explanations Debit Credit 1/1/2017 Cash 2,201,642 Discount on bonds payable 158,358 Bonds payable 2,360,000 Amortization table periods intt to be intt exp Discount unamorti Bond paid amortiza discount CV issue date 158,358 2,201,642 1 165200 176131 10931 147427 2212573 2 165200 177006 11806 135621 2224379 3 165200 177950 12750 122870 2237130 interest paid = 2,360,000*7% 165200 interest expense = CV *8% Date Account titles and Explanations Debit Credit 12/31/2017 interest expense 176131 discount on bonds payable 10931 interest payable 165200 1/1/2018 interest paybale 165200 cash 165200